Lifestyle

10 Facts About the Taxi Industry in S’pore ‘Coz It Could be Dying Soon

2017-09-18 , 12:19 pm

The taxi industry has been a hot topic for discussion on both social media and mainstream media for some time. The grip about the industry mainly comes from the fact that taxi drivers are complaining that their livelihood have been affected by private-car hire companies Uber and Grab.

Some of tech-savvy taxi drivers have switched companies to either Uber or Grab because they earn better as a private-car driver. Just a few days ago, over 2,000 ComfortDelGro drivers expressed interest in joining Grab. That’s a lot of drivers!

So, what has cause the taxi industry to stumble? Let’s find out with 10 simple facts.

Taxi Drivers are Complacent
It is not uncommon for us to hear complains about rude taxi drivers. Most complains are a three-thronged one – stemming from the rudeness of the cabbies, to their almost unbelievable ignorance of the routes in Singapore and their creative ways to drive you from point A to point B in the longest way possible.

The attitude of the taxi drivers drove many commuters to the private-car hires when they launched in 2013 and that possibly start the decline of the taxi industry.

And not to mention that “change shift” thingy and that cabs almost disappear before the surcharges kick in.

Taxi Companies are also Complacent
If we look at the major taxi companies such as ComfortDelGro and SMRT Corp, we can see where the complacence come from. These companies hold a “heck-care” attitudes towards Grab and Uber when they first launched, believing that commuters will “still come back to taxis”. The slow response to competition cause them to lose out in terms of the number of hired vehicles and also in terms of passengers. By July 2017, the taxi population has fallen by more than 10 per cent.

There are 2,400 taxis idling without a hirer
Due to the complacency of taxi companies, there are roughly 2,400 idling taxis as of July 2017. This puts the unhired rate of taxis at 9.1 per cent, up from 5 per cent in 2016. Obviously this is bad news for the taxi companies, because the economies of taxi business in Singapore is such that the cost of one idling taxi needs roughly 7 operational taxis to cover. If this goes on, the taxi companies will find themselves running a money-losing business in the longer run.

Taxi companies are cutting rentals to attract hirers
In the past, taxi rentals are not cheap. A brand-new taxi can easily cost a hirer more than a $100 a day to rent. However, in view of the poor take up rate, taxi companies have been cutting rentals to attract new hirers. Since late 2016, both Trans-cab and Premier have cut rentals up to 40% in order to attract new hirers.

People are taking traditional taxis less often
As mentioned earlier, Grab and Uber have been eating away at the edges in competition for ridership. In a report released from LTA, the average daily ridership of taxi was at an 8-years low of 853,000 between January and April 2017, a 12 per cent drop from the same period last year.

Singapore has more private-car hires than taxis
It is no surprise that private-car hires are on the rise since taxis are getting less popular. As of April, this year, there is about 1.5 times more private-car hire than taxis in Singapore. While Grab and Uber benefits both drivers and commuters with their multitudes of offers and benefits, it is important to monitor if such a business model is sustainable in the long run. If these companies fail, the taxi industry will be adversely affected because a huge shortage of taxis will become a reality if the private-car hire is removed from the industry.

SMRT Corp is looking to sell its taxi business
The unprofitability of the taxi business has prompted SMRT Corp to find a buyer for its taxi business. The large corporation has enough to worry about with its failing train system; so, selling its fledging taxi business sounds like the right thing to do. It was known that Grab has been in talks with SMRT Corp to buy the taxi business, but news about the potential buy-over faded out in May this year over employment terms.

Taxi drivers are exiting the industry
With the harsh competition for commuters, many taxi drivers who are able to find other jobs have exited the industry. An interview conducted by Straits Times in July 2017 showcased a typical example of a former taxi driver (from ComfortDelGro) who switched his career as a taxi driver to a security officer. The man who was interviewed concluded that his new job provided a better security, offers a higher paying salary and expects him to work the same hours as he did when he was driving a taxi. On top of that, he also gets off days, vacation leave, dental and medical benefits as well as CPF.

Commuters prefer private-car hire
Taking a look at commuters’ preferences, private-car hire from Grab and Uber obviously win out. A simple explanation is this – they are more service-oriented. Drivers from Grab and Uber greet you warmly when you board their cars, and some will chit-chat with you about anything under the sun. Even if they do not chatter, the driver ensures that you are comfortable by adjusting the air-conditioning, the seats, etc. They also alert you to ERP and some of them go out of their way to help you avoid paying extra ERP, even if it means that they have to take a slightly longer journey for the same fare.

Most of them do so because of the rating system: if the passenger gives a bad rating, he or she might be suspended from Grab / Uber.

Private-car hire uses GPS; normal taxi drivers don’t
A big reason why commuters prefer private-car hire is the usage of GPS. Having GPS means that the driver does not need to ask the commuters, “eh, how to go to this place ah?” or the famous “you want go which way?”. If you replied “anything”, it is likely that the taxi driver will go the longest way, or he would simply get lost on the road, making you pay extra. Private-car hire are simpler. The GPS shows the way, and you will get to your destination based on the fastest possible route.

If a Grab / Uber driver went the direction that is not suggested by the GPS, you can even dispute the fare!

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This article was first published on goodyfeed.com

10 Facts About the Taxi Industry in S’pore ‘Coz It Could be Dying Soon

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